It’s very hard to estimate exactly how much we’ll have to save for retirement, as that would require knowing how much our investments will grow in the future. Even if we try to do long-term trends, this can be difficult. But Richard Ferri, author of All About Asset Allocation and founder of Portfolio Solutions, LLC has done his best by layering risk premiums to estimate market returns. You can find the article for free online – ‘Portfolio Solutions 30-year Market Forecast’. An excerpt:

At the end of each year, we analyzed several economic and market risk factors including Federal Reserve forecasts, inflation forecasts derived from inflation protected securities, and the volatility of asset classes, styles, and categories. From that data, we developed estimates for longterm future returns.

Here are some of the results:
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Spent some time this weekend reading many of the articles at FundAdvice.com. The website is the educational arm of Merriman Capital Management, an investment management firm that is heavily into DFA funds. They promote no-load, asset-specific, low-cost funds (which often end up as index funds), and have a lot of interesting things to say on both active and passive investing.

I naturally gravitated towards the passive investing articles, and favorite article so far is ‘The ultimate buy-and-hold strategy’, which agrees with why I want to slice-and-dice my portfolio. I was also intrigued by their ideas for investors with small portfolios. Instead of picking an all-in-one fund or a cash fund until you have enough to invest, they advise you to pick the asset class with the most potential return but highest volatility (U.S. small-cap value to begin with) and build upwards.
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Here is another snapshot of my retirement portfolio as of market close 8/3. I haven’t bought or sold any funds since my last update. I hope to use this data later to better track my overall investment returns.

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In addition to my monthly net worth updates, I’ve decided to also take snapshot of my investing portfolio and my overall asset allocation. I want to also track any fund or ETF purchases so that I can better calculate my actual returns over time.

I haven’t decided whether to do it monthly or quarterly, but here’s my retirement portfolio as of today:

I also decided, after meaning to do it for a long time, to track my “what I could come up with in 24 hours” cash balance as well as my current metric of “non-retirement” funds for my Mid-Term goal. This Liquid Available Cash is a better measurement of how much money I could put towards a house down payment as it removes things like my 0% balance transfer money, and my car equity. My small individual stock portfolio is included because I would just sell them as needed.

Right now, I’m just putting down my best estimate.

Thoughts

The stock market overall ain’t doing so hot. I wish I had more money to dollar-cost average, but I think I have already put too much money into retirement and have neglected my cash needs. I am going to keep most of the money I make this summer in cash accounts and hopefully pump up that $25,000 number a bit.

I am also considering moving my IVV S&P 500 ETF holdings, which are currently in a taxable account at Scottrade, to a Self-Employed 401k (administrator unknown). Since they are currently at a loss, I won’t have any capital gains tax to pay if I sell and I’ll just need to find an appropriate ETF to avoid wash-sale rules. I’ll also be able to harvest some tax losses.